sources of business capital

Ways to Fund Your Small Business

While you will see advertisements and press releases all over putting the message forward that banks are committed towards lending money to business start-ups and boasting on the amount of loans that they have given to small business entities, the truth of the matter is that these same banks do not like giving credit facilities to small businesses and actually if you carry out further research you will realize that they do not give out this loans as much as they say.

Thus if you want some financing for your business, you will need to have a lot of collateral plus a good credit record, this will allow you to get a personal loan. But it is very hard to get a business loan if it is not tied to something like your mortgage. So what options are you left with to finance your business? Below we highlight some of the ways through which you can finance your small business.business capital

Self-funding

You will realize that majority of entrepreneurs will fund their businesses by themselves. One will use his/her savings or undertake a personal debt so that they can fund their business. Alternatively, if you are really into funding your business and you see that it has a prospect of bringing returns you can sell off some of your assets and put the money generated into your business, with the hope that it will generate profits.

Family and friends

The other way that you can raise funds to finance your small business is engaging family and friends. They can give you funding by either providing debt funding or equity funding. Even though this is a good way that you can finance your business, it is important to be careful about such engagements. If the business does not go as projected, there is a risk of ruined friendship. Thus you should ensure that that the friends and family know the risk that is involved before they commit their funds.

Partners

Another way that you can fund your business is bringing on board a business partner. You can either incorporate them as employees or not. It is important that you get a strategic partner as they can easily align their resources with your business goals.

Crowdfunding

crowdfunding for startup capitalOne of the most effective ways of financing your business which has gained popularity in the recent past is crowdfunding. This is where you will put your business idea on the web, and hope that quite a good number of people buy into the idea so that they can donate to you so that you fund your business. Look at the most popular crowdfunding portals, post your idea and formulate your funding campaign and it is likely that you will receive funds from potential investors to finance your business.

Venture capital

You can also source funding from such firms. These are the type of firms that are willing to invest in business during the early stages but are still looking for large investments that they can take a large and significant share of that particular company. They are often looking for a controlling interest.

Some of the other ways that you can finance your business include: seeking for angel investors, cloud funding, or even taking up a loan.